The fiscal year 2002-03 proved to be a good year for the Pakistani automobile industry and its allied industries. Between them, the five local assemblers produced a total of approximately 75,500 units, compared to just over 47,000 units produced in the previous fiscal year.
The current fiscal year certainly started out on a healthy note with a projected production figure of 114,000 units against an installed capacity of 108,000 units.
But ever since the announcement in early February that the cabinet has decided to allow the import of reconditioned cars, the winds of uncertainty have started to blow across the industry.
What continues to puzzle industry insiders, it is learnt, is that though the decision to import as such has been announced, no date for implementation has been mentioned, despite the passage of almost three weeks.
Even the decision itself is not a clear-cut one, since the cabinet in its wisdom has decided to constitute yet another committee, which will make its own recommendations, we are told. Could there be more to this than meets the eye, as so often happens in this country?
It has become fashionable in today's world to pin everything on the poor, over-worked consumer, from the lack of proper civic amenities to the imposition of new taxes to any proposed business initiative.
It is not in the consumer's interest, one lobby says. Why should the consumer bear the burden of all this, counters another.
In the absence of any effective consumer-protection agency, the consumer, needless to say, is actually the last one to be considered. What Pakistan desperately needs is its own, home-grown Ralph Nader, one not motivated by either presidential ambitions or greed. Until then, what we will have is various vested-interest groups, all masquerading as the voice of the consumer.
So, will the import of reconditioned cars be in the 'consumer's interest', or will it just be another, though grander, manifestation of the 'used-car salesman' species, the kind that looks you straight in the eye while divesting you of your heard-earned life savings? Time alone will tell, that is if the government's announcement is genuine and not just another iron-hand-in-velvet-glove way to force the auto industry into reducing prices and ensuring faster delivery of vehicles, as many suspect.
Of course, if the net result is a reduction in prices of locally manufactured vehicles and shorter waiting times, that would be all to the good. Who knows, the consumer may benefit yet! But another aspect we cannot afford to ignore at this time is the clich‚d 'national interest', about which we heard a lot during the recent nuclear proliferation scandal. As some clever journalist pointed out, that is as difficult to pin down as the 'consumer's interest' and depends on who is doing the defining.
However, there seems little doubt that in a post-WTO scenario, only countries with their own strong industrial base will survive the internecine economic warfare that is bound to ensue.
To destroy any lasting hope of investment, whether foreign or local, is myopic at best and may not in the long-run even be in the consumer's best interest. Only a fool or a madman would gamble on an investment that is not protected by guarantees and secured returns - and the management's of the domestic auto industry and its allied industries are neither.
Another area of the economy that will probably be negatively impacted by the change in the government's auto policy is the leasing sector in particular and the commercial banking sector in general, as they have made heavy investments in the auto industry during the recent past.
The announcement of the decision to import reconditioned cars did not clarify whether some new legal framework would be devised to cover their financing.
Since it was cheaper financing that put locally assembled cars within the reach of many, this new situation may ironically militate against the 'consumer's interest'.
And the current uncertainty is certainly not favourable to the leasing or banking sectors either.
In a country such as Pakistan, where until fairly late in the day cars were considered a luxury affordable only by the affluent, and even motorcycles were beyond the reach of many, the consistent increase in demand for vehicles over the past two years, fuelled by cheaper financing, was a very healthy sign for the domestic economy. Will this now go into reverse gear, one wonders.
The government must take the long view. Even though it has announced its decision, it is not too late to listen to the voice of reason. Whatever committee is tasked to give its recommendations should carefully examine the pros and cons of the implementation process rather than being swayed by the shrill, yet scattered, voices of the vested interest lobbies.
The dreams of job creation and secured technology transfer would go up in smoke, as would the prospects of long-term foreign investment. And so, too, would the chance for the 'consumer's interest' to coincide with the 'national interest' for once.
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